Ryerson UniversityPLG 620 Advanced Planning Studio I

Prepared for Bousfields Inc. and Menkes Instructor: Carlo Bonanni

April 7, 2016

Mike BennettErica Liu

Cameron MacdonaldDevin Matheson

Alex MiorAlyson Naseer

Lindsey NantesShelly Patel

Lucas PetriccaMatthew PeveriniCale Vanderveen

Jiapeng Wang

City of Toronto Residential Rental Property Demolition

Final Report

April 2016

Contents

1 Executive Summary

p. 7

2 Introduction

2.1 Client Description

2.2 Our Team,Our Project Purpose

p. 8 - 9

3 Toronto’s Housing Replacement Policies

3.1 History of Policies

3.2 Intent of Policies

3.3 Administering the Policies

3.4 Purpose-Built RentalHousing Conditions

p. 10 - 11

9 Research Analysisand Conclusions

9.1 Importance of MaintainingRental Stock

9.2 Effect on Feasibility of Redevelopment

9.3 Inconsistency Between Cityand Provincial Plans

p. 41

8 Field Research

8.1 Interviews with Municipal Staff8.1.1 Strategic Initiatives, Policyand Analysis – City of Toronto

8.1.2 Affordable Housing Office –City of Toronto

8.2 SketchUp Tutorial

8.3 Pro Forma Tutorial

8.4 Comparative RentalReplacement Policies

p. 38 - 39

4 Policies andRegulation Framework

4.1 Provincial Policies4.1.1 The Planning Act, 1990

4.1.2 Provincial PolicyStatement, 2014

4.1.3 Growth Plan for the Greater Golden Horseshoe, 20064.1.4 Ontario Residential

Tenancies Act, 20064.1.5 City of Toronto Act, 2006

4.2 Municipal Policies4.2.1 City of Toronto Official Plan4.2.2 Toronto Municipal Code,

Chapter 667

4.3 Site Specific Policies4.3.1 Avenues and Mid-Rise

Buildings Study, 20104.3.2 Tall Building Design Guidelines

p. 12 - 14

6 2375-2385Danforth Avenue

6.1 Existing Site Conditions

6.2 Neighbourhood Contextand Surrounding Uses

6.3 Transportation andTransit System Access

6.4 Justifying Intensification

6.5 Massing Models6.5.1 Planning Rationale6.5.2 Shadowing Study

6.5.3 Regulatory Adjustments to Obtain Development Approval

6.6 Pro Forma

p. 18 - 27

7 165 Erskine Avenue

7.1 Existing Site Conditions

7.2 Neighbourhood Contextand Surrounding Uses

7.3 Transportation andTransit System Access

7.4 Justifying Intensification

7.5 Massing Models7.5.1 Planning Rationale7.5.2 Shadowing Study

7.5.3 Regulatory Adjustments to Obtain Development Approval

7.6 Pro Forma

p. 28 - 37

5 Case Studies5.1 Methods

p. 16 - 17

10 Recommendations

10.1 ‘Status Quo’ Option

10.2 Payment-in-Lieu

10.3 Sliding Scale Level of Relief10.3.1 Rationale

p. 42 - 45

11 Final Statement

p. 46 Appendices

p. 49 - 61

Front, Contents page and black and white interior

report images: Mike Bennett, Devin Matheson

Team Logo: Jiapeng Wang

Final Report Design: Lindsey Nantes

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1 Executive Summary

2032 Consultants Inc. has been retained by Bousfields Inc. and Menkes Developments to prepare a final report that analyzes the impact of the City of Toronto’s purpose-built rental housing demolition and conversion policies on the local development industry. This final report includes: our firm’s research and interpretation of applicable provincial and municipal policies; case study site design and financial analyses; and final recommendations outlining potential reforms to the present rental housing demolition and conversion policies.

Toronto’s current rental housing demolition policies apply to properties containing six or more rental units, excluding registered condominiums. A one-for-one on-site replacement policy for all lost rental units with new units of equivalent size and rent prices is designed to maintain the City’s existing rental housing stock. Displaced tenants are additionally provided with relocation assistance and the first right to return to the rebuilt housing development.

Our review of these policies indicates that in comparison to other Canadian municipalities, Toronto’s rental housing demolition and conversion policies and regulations are somewhat restrictive and, in certain instances, represent a barrier to redevelopment. It was also found that these policies may conflict with both provincial and municipal plans for intensification in urban growth centres and corridors. By threatening the feasibility of redevelopment, these policies could potentially be limiting the degree of localized growth required to meet the prescribed intensification targets.

Tasked by Bousfields, the 2032 Consultants team performed site analyses at 2375-2385 Danforth Avenue and 165 Erskine Avenue to evaluate

the effects of Toronto’s rental replacement framework on potential redevelopment sites in the city. Our firm produced 3D massing models using SketchUp software that reflect the best design practices that apply to each study site. Pro forma analyses were conducted for these properties to forecast the total redevelopment project costs, and weighed them against estimated revenue sources to determine the feasibility of intensifying each site given the current rental housing replacement conditions.

Following our analyses of policy implementation, design standards, and financial feasibility of our study sites, 2023 Consultants formulated a set of three recommendations for amending rental replacement policies in the City of Toronto. These recommendations are intended to mend inconsistencies of municipal policies with the goals of provincial legislation and include: maintaining the policies as currently written; implementing a ‘payment-in-lieu’ model; and our preferred option of a sliding scale model that adjusts the number of replacement units required in a proposed redevelopment based on their size relative to the total gross floor area (GFA) of the new building.

Our firm believes that a sliding scale model represents the most effective course of action, providing a degree of relief for developers whose particular projects may not be feasible given the present one-for-one replacement policy. Additionally, this policy would maintain a significant stock of purpose-built rental housing units in the municipality and in increasing the feasibility of developing certain constrictive sites, would contribute to meeting provincial intensification targets. 2032 Consultants endorses this balanced approach which weighs the interests of the development industry, the Province of Ontario and the City of Toronto.

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2 Introduction

As Canada’s largest and most economically powerful city, Toronto has recently seen an unparalleled level of growth and development. This growth has come with a cost as land values and subsequently housing costs, both ownership and rental, have risen dramatically.1 Consequently, housing affordability has taken its place near the top of the city’s policy agenda.2

One way in which the City of Toronto has attempted to manage this problem is to regulate the conversion and demolition of purpose-built rental housing units. In simplest terms, the city mandates a one-for-one, on-site replacement of all rental units that are to be demolished to make way for new development, if the site is identified as having six or more rental units. These policies intend to maintain affordable rental housing stock within the City of Toronto. This report will examine Toronto’s current rental housing demolition and conversion policies, assessing both their success in maintaining adequate rental housing options in the municipality, and their effects on the feasibility of redevelopment. Our recommendations will weigh the competing interests of the Province of Ontario, the City of Toronto, and local real estate developers.

1 Canadian Mortgage and Housing Corporation. (Fall 2015). Housing market outlook: Greater Toronto Area. Retrieved from http://www.cmhc-schl.gc.ca/odpub/esub/64319/64319_2015_B02.pdf?-fr=14562586733432 Toronto Real Estate Board. (January 2016). Market watch. Retrieved from http://www.trebhome.com/market_news/market_watch/

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2.1 Client Description

Founded by John Bousfield in 1974, Bousfields is one of the pre-eminent planning firms in the city of Toronto. The firm currently employs an experienced team of approximately 40 planners, designers and administrators, operating out of their Church Street offices. As many of their clients are real estate developers, the firm has a keen interest in municipal and provincial development policies, including those related to rental housing demolition and conversion. Bousfields has worked with private sector clients in bringing some of Toronto’s most revered developments to fruition including: the Mirvish+Gehry project on King Street West; the Globe and Mail Centre on King Street East; and Daniels at High Park. This work has included the preparation of zoning by-law amendments, site plans and draft plans of subdivisions. Bousfields has also undertaken work in the preparation of policy reports for both public and private sector clients. The City of Vaughan, the City of Ottawa, and the Ministry of Municipal Affairs and Housing are among the firm’s major public sector clients. In the private sector, Bousfields has consulted with the Urban Development Institute and the Greater Toronto Homebuilder’s Association.

Menkes is a real estate development firm that has often collaborated with Bousfields. Their portfolio contains a wide range of projects including single family homes and subdivisions, condominiums and office/retail developments. Some of their most prominent Toronto-based developments include 365 Church Street, 87 Peter Street, and Fabrik at the corner of Richmond Street and Spadina Avenue.

2.2 Our Team, Our Project Purpose

2032 Consultants is a full-service urban planning firm based in downtown Toronto, offering services in land use planning, development applications, policy planning and community consultations. Applying our passion for building great cities and communities, our firm has established a reputation for delivering high quality outcomes in a timely manner. Bousfields Inc. and Menkes Developments have jointly commissioned 2032 Consultants to prepare a thorough and thoughtful report researching and analyzing the effects of the City of Toronto’s rental housing demolition and conversion policies on the development industry. Our objective is to determine whether existing policies are best achieving their desired results in maintaining the local rental housing stock or if they are simply creating unnecessary barriers to redevelopment.

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3 Toronto’s Housing Replacement Policies

The City of Toronto’s Official Plan provides a strategic vision for addressing rental housing issues in the municipality while Chapter 667 of the Toronto Municipal Code outlines the rules and procedures that control residential rental property demolition practices.

As currently written, Chapter 667 requires that in any instance where a development leads to the demolition of six or more purpose-built rental dwellings in a privately owned building or related collection of buildings, that each of the previous units must be replaced on-site as part of the new development. These replacement units must be of equivalent size and type as the units they are replacing while retaining their mid-range or affordable rental rates as defined by Canadian Mortgage and Housing Corporation (CMCH) for ten years, post construction, and remaining rental units for an additional ten years thereafter.

3.1 History of the Policies In Canada, housing policies, including those related to rental housing, have become increasingly decentralized since the 1960s. In 1963, the federal government, in a joint provincially funded program, began providing subsidized rental housing units for low-income residents.3 At this time, in the pre-condominium era, all medium and high density residential neighbourhoods were rental neighbourhoods by default and the rental housing stock grew dramatically into the early 1970s.

3 Hulchanski, J. D. (2003). What factors shape Canadian housing policy? The intergovernmental role in Canada’s housing sys-tem. Retrieved from http://www.ppm-ppm.ca/SOTFS/Hulchanski.pdf

By 2000, responsibility for social and rental housing had been completely downloaded to the City of Toronto from both the provincial and federal governments. Enabled under the terms of the Planning Act, 1990, Toronto adopted its Official Plan in 2002 which highlighted the importance of providing a full range of housing options across the city including purpose-built rental units.4

When the provincial government passed the City of Toronto Act, 2006 (CoTA), Canada’s largest municipality was afforded greater autonomy to prohibit and regulate the demolition of rental housing units throughout the city. Toronto city council capitalized on their new powers under CoTA and passed By-Law 885-2007 on July 19, 2007 to adopt the City of Toronto Municipal Code Chapter 667, Residential Rental Property Demolition and Conversion Control.

3.2 Intent of the Policies Chapter 667 of the Toronto Municipal Code does not address social housing, but given the soaring cost of home ownership in Toronto, and the higher prices of condominium rental on the secondary rental market, purpose-built rental unit represent a more affordable option for local residents.

The City of Toronto’s rental housing demolition and conversion policy is aimed at maintaining existing purpose-built rental housing stock in the municipality. After close to two decades of

4 Shapcott, M. (2001). The Ontario Alternative Budget: Made-in-Ontario Housing Crisis. Canadian Centre for Policy Alterna-tives

1960s 1970s 1980s 1990s 2000s

1963 - Federal government starts providing subsidies for rental housing units for low-income residents

1985 - Federal government stops rental housing subsidies

1993 - Federal government announces it will no longer fund new social housing

1995 - Provincial social housing development programs cancelled

1998 - Harris government makes dramatic changes to tenant protection laws

2006 - Introduction of Residential Tenancies Act

2006 - City of Toronto Act, gives Toronto power to control residential rental demolition

2007 - City of Toronto adopts Chapter 667 of the Municipal Code regulating the demolition of rental buildings

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minimal growth in Toronto’s rental housing stock, the current one-for-one replacement policy for demolished residential properties with six or more dwellings units reflects the city’s need to maintain existing rental units.5

3.3 How the Policies are Being Administered Since the passing of the rental demolition by-law, the city has maintained a fairly strict interpretation of the regulations. While some rental housing demolition applications have taken contextual circumstances into consideration, this is incredibly rare. Since their adoption, only three projects have had the replacement policies waived and these were all very special circumstances.6

The size and distribution of unit types being replaced has also been strictly enforced. While some concessions have been given by the city for smaller replacement units, this reduction in size will never amount to more than a three to five per cent reduction of floor space. Similarly, the distribution of unit types is also rarely changed. In some instances, where the previous rental units were made up of strictly bachelor, developers have offered a more even distribution of units to include one and two bedroom units. In these instances, there is typically no objection from the City.

Aside from these minor exceptions, the policies and regulations are enforced exactly as they are written. Should a developer wish to demolish six or more residential rental units, they must replace those units at the same price, size and type. Furthermore, those units must be replaced on-site, and be operated as affordable units for a minimum of ten years, and remain rental units for an additional ten years.

5 Ministry of Municipal Affairs and Housing. (1990) Planning Act. Retrieved from https://www.ontario.ca/laws/statute/90p13

6 Personal Communication with Lauralyn Johnstone & Jeremy Kloet - City Planning - Strategic Initiatives, Policy and Analysis). (February 24, 2016)

3.4 Purpose-Built Rental Housing Conditions The CMHC maintains a detailed set of nation-wide rental housing market statistics, updated twice yearly. These data sets play a major role in guiding the City of Toronto’s strategic efforts for providing adequate housing options for its residents. During each of the past two years, Toronto’s vacancy rate in rental apartment structures with three or more units has been recorded at 1.6 per cent. This indicates a “severe shortage” of rental housing units in the city. The CMHC considers a vacancy rate between 3.0 to 3.9 per cent to be reflective of a “balanced” residential rental market.

These vacancy rates are based specifically on purpose-built rental units and do not include vacancy rates for secondary rental market units such as condominiums. A unit is considered vacant only if it is physically unoccupied and available for immediate rental at the time of the CMHC survey.7

The federal and provincial governments’ downloading of housing authority to municipalities has coincided with two decades of minimal growth to Toronto’s rental housing stock, underscoring the need to maintain existing units in the city. The CMHC’s 2015 statistics indicate that of the 42,287 housing starts in the City of Toronto, only 2,842 were purpose-built rental dwellings. Meanwhile, condominium starts in the city last year totaled 23,862. While the primary purpose of condominiums is homeownership, they nevertheless represent a significant rental housing option in Toronto, albeit a more expensive one than purpose-built dwellings. Although purpose-built rental dwellings are not categorized as social, or affordable housing, the City of Toronto views them as a key asset in providing more economical residential rental options compared to condos on the secondary market.

7 Canadian Mortgage and Housing Corporation. (2015). Housing Market Outlook - Greater Toronto Area. Retrieved from https://www03.cmhc-schl.gc.ca/catalog/productDetail.cfm?-cat=99&itm=15&lang=en&sid=NdA6OD1kB4WZB3zQn2nPAtvxcH-Q5oq3h6eqtmDoPbErktbN2cj5u3RPNWlA3Z51s&fr=1459801015679

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4 Policies and Regulation Framework

4.1 Provincial Policies At the provincial level, Ontario’s Planning Act, 1990, Provincial Policy Statement, 2014, the Growth Plan for the Greater Golden Horseshoe, 2006, the City of Toronto Act, 2006, and the Residential Tenancies Act provide the legislative framework for rental housing demolition and conversion practices.

4.1.1 The Planning Act, 1990 The Planning Act (The Act) is the guiding statute for all planning policies in Ontario.8 While The Act does not specifically address rental housing, it does stipulate that the “adequate provision of a full range of housing, including affordable housing” is a matter of provincial interest that must be addressed at the municipal level. This broad wording would invariably include purpose-built rental dwellings.

4.1.2 Provincial Policy Statement, 2014 The Provincial Policy Statement (PPS) is a guiding document providing policy direction for matters of provincial interest related to planning and development.9 The PPS outlines Ontario’s land use policies, including affordable housing policies and objectives, stating that planning authorities must, “provide for an appropriate range and mix of housing types.” Additionally, the PPS requires that this range of housing types and accompanying densities must “meet projected requirements of current and future residents by establishing and implementing minimum targets for the provision of housing which is affordable to low and moderate income households.”

4.1.3 Growth Plan for the Greater Golden Horseshoe, 2006 The Growth Plan for the Greater Golden Horseshoe (The Growth Plan) sets out growth

8 Ministry of Municipal Affairs and Housing. (1990) Planning Act. Retrieved from https://www.ontario.ca/laws/statute/90p139 Ministry of Municipal Affairs and Housing. (2014). Provincial Policy Statement. Retrieved from http://www.mah.gov.on.ca/Asset-Factory.aspx?did=10463

management policies within the Greater Golden Horseshoe, including the City of Toronto, to the year 2041.10 Intensification is a major component of The Growth Plan, identifying urban growth centres and corridors -- including Avenues -- and requiring municipalities to concentrate a minimum of 40 per cent of annual residential development within existing built-up areas. Municipalities are further required by The Growth Plan to plan and develop a “range of housing types” to meet these intensification targets and to establish and implement “minimum affordable housing targets,” including rental dwellings.

4.1.4 Ontario Residential Tenancies Act, 2006 The Ontario Residential Tenancies Act protects the rights and responsibilities of residential tenants and landlords.11 Developers, acting as landlords must adhere to the policies in this act regarding notices and compensation prior to vacating rental units for demolition or conversion.

4.1.5 City of Toronto Act, 2006 The City of Toronto Act (CoTA) is the legislative framework that defines the City of Toronto’s scope of authority, including matters related to rental housing demolition and conversion.12 CoTA grants the City of Toronto the power to “prohibit and regulate the demolition of residential rental properties” and to “prohibit and regulate the conversion of residential rental properties.” Consequently, the City of Toronto mandates that developers obtain a “Rental Housing Demolition and Conversion” permit from the City in order demolish or convert residential rental properties and can impose conditions required to obtain said permit. Decisions made under CoTA are appealable to Ontario provincial court, but not to the OMB.

10 Ministry of Infrastructure. (2006). Places to Grow: Growth Plan for the Greater Golden Horseshoe. Retrieved from https://www.placestogrow.ca/content/ggh/2013-06-10-Growth-Plan-for-the-GGH-EN.pdf11 Ministry of Municipal Affairs and Housing (2006). City of To-ronto Act. Retrieved from https://www.ontario.ca/laws/statute/06c1112 Ministry of Municipal Housing and Affairs. (2006). City of To-ronto Act. Retrieved from https://www.ontario.ca/laws/statute/06c11

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4.2 Municipal Policies The City of Toronto’s Official Plan provides a strategic vision addressing rental housing issues in the municipality while Chapter 667 of the Toronto Municipal Code outlines the rules and procedures related to residential rental property demolition and conversion.

4.2.1 City of Toronto Official Plan The City of Toronto’s Official Plan (the OP) is a strategic document outlining the municipality’s policy objectives.13 The OP identifies the need to stimulate more private sector development of purpose-built rental housing while concurrently preserving the city’s existing rental housing stock.

Section 3.2.1, Policy 6 of the OP addresses the approval process for residential rental unit demolition and conversion that would result in the loss of six or more rental dwellings in a private residential building, or collection of related buildings. Among the conditions for the approval of such developments are: the replacement of all demolished units at their original size and type at similar rent prices; the restriction of rent price increases for replacement units within the guidelines set by both the city and the province; and, an acceptable tenant relocation and assistance package for displaced tenants. These requirements are contingent on whether Toronto’s rental dwelling vacancy rate has returned to a balance level of 3.0 per cent for four consecutive years, as determined by the CMHC.

4.2.2 Chapter 667 of the TorontoMunicipal Code Chapter 667 is a by-law that provides the necessary detail to implement the policies of the City of Toronto Act, 2006. The by-law indicates the criteria by which dwelling units are classified, lists procedures for obtaining a residential rental demolition permit, outlines the Chief Planner’s powers of authority and responsibilities in approving residential demolition permits, and defines the list of offenses and related charges for developers who contravene the orders laid out in the Municipal Code.

4.3 Site Specific Policies

4.3.1 Avenues and Mid-Rise Buildings Study,2010 Commissioned by the City of Toronto, this joint study by Brook McIlroy Planning + Urban Design/Pace Architects, E.R.A. Architects, Quadrangle Architects Ltd., and Urban Marketing Collaborative produced recommendations to encourage the development of the city’s Avenues where intensification is encouraged by the Growth Plan.

13 City of Toronto. (June 2015). City of Toronto Official Plan. Retrieved From http://www1.toronto.ca/wps/portal/contentonly?vgnex-toid=03eda07443f36410VgnVCM10000071d60f89RCRD

(Source: Brook McIIroy, E.R.A Architects, Quadrangle Architects Ltd (2010). Avenues and Mid-Rise Building Study)

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The study produced a series of design-based performance standards for mid-rise developments on the Avenues.14 Key points of the performance standards include that: buildings are no taller than the adjacent right of way is wide; buildings transition in scale to surrounding neighbourhoods along a 45° angular plane; sidewalks are wide enough to support trees and encourage safe pedestrian use; sidewalks on the Avenues maintain at least five hours of sunlight from the spring to the fall; and ground floors of buildings create an animated frontage along sidewalks and continuous streetwall.

2032 Consultants applied these performance standards to our case study site at 2375-2385 Danforth Avenue to determine whether they create barriers to redevelopment when combined with residential rental housing replacement policies.

4.3.2 Tall Building Design Guidelines The City of Toronto’s Tall Building Design Guidelines provide site specific and measurable guidelines for the construction of tall buildings to ensure their compatibility with the existing and planned environment while limiting local impacts.15 In defining a “tall building” context matters since tall buildings are defined in the guidelines as “buildings with height that is greater than the width of the adjacent street right-of-way”.

Several planning issues, including the site context, and availability of adequate infrastructure are considered on a site-by-site basis prior to permitting a tall building. Prior to receiving permission for tall building construction, developers must provide the planning rationale for site design. Proximity to public transit, parks, schools, community and cultural services, and child care facilities are evaluated to determine whether a potential tall building would be well supported and reflective of “good planning”. These services and amenities are applied to a “walkable” context analysis and mapped out within a 250 and 500 metre radii from the site as part at

14 City of Toronto. (May, 2010). Avenues and Mid-Rise Build-ings Study. Retrieved from http://www1.toronto.ca/wps/portal/con-tentonly?vgnextoid=7238036318061410VgnVCM10000071d60f89RCRD15 City of Toronto. (May 2013). Tall Buildings Design Guide-lines. Toronto: city Planning Division.

the planning rationale. Additionally, a “block” context analysis must be used to evaluate setback patterns, building heights and massing, and relationship to the surrounding built form and open space.

Tall building designs consists of three components: a base building; middle; and top. At its base, tall buildings must provide a minimum first floor height of 4.5 metres and must articulate smoothly between the public and private realms, encouraging a safe and animated space that fits appropriately into the existing neighbourhood context. In the middle, towers must maintain a floor plate of no more than 750 square metres while maintaining setbacks of 12.5 metres from rear and side property lines. Towers located on the same site must be separated by a minimum of 25 metres. Towers must also be placed away from streets, parks, open spaces and neighbourhoods to reduce their visual impacts. At the top, tall buildings must appropriately contribute to the skyline while reducing their impacts on migratory birds and overall light pollution.

Development applications for buildings in excess of 20 metres in height must typically include a sun/shadow study which demonstrates the shadowing effects on adjacent lands and properties.16 Test time should be done on the spring and fall equinoxes on March 21, and September 21 starting at 9:18 am, and every subsequent hour until 6:18 pm. The sun/shadow study must demonstrated that properties adjacent to the proposed development site are afforded a minimum of five hours of sunlight on these days. It should be noted that sun/shadow studies may also be required for mid-rise Avenue development proposal to ensure the provision of at least five hours of sunlight along the sidewalks opposite the building site.

The tall building design guidelines also protect the public realm, ensuring that adequate and high-quality, sustainable pedestrian space is afforded with minimal wind effect and the provision of weather protection elements such as canopies and overhangs.

16 City of Toronto. (July 2012). Sun/Shadow Study Terms of Reference. Retrieved from http://www1.toronto.ca/static_files/City-Planning/PDF/sun.pdf

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5 Case Studies

0 3 6km

Case Study Sites

Toronto Area

Case Study Sites

165 Erskine Avenue

2375-2385Danforth Avenue

(Source: Erica Liu. (2016). City of Toronto Context Map; location of sites in the Greater Toronto Area)

In order to determine whether Toronto’s residential rental demolition and conversion policies have an impact on the feasibility of development in the city, Bousfields assigned two case study sites for 2032 Consultants to evaluate from contextual, design, and financial perspectives: 2375-2385 Danforth Avenue; and 165 Erskine Avenue. Both sites are comprised of purpose-built residential rental structures containing more than six dwellings and are consequently subject to Toronto’s rental housing demolition and conversion policies.

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Danforth Ave Westlake Ave

Morton Rd

Stephenson Ave

Site Boundary

2375-2385 Danforth Ave

0 40 80m(Source: Erica Liu. (2016). 2375-2385 Danforth Avenue Site Boundary Map)

(Source: Erica Liu. (2016). 165 Erskine Avenue Site Boundary Map)

Erskine Ave

Mt Pleasant Rd

Broadway Ave

Redpath Ave

165 Erskine Ave

0 40 80m

Site Boundary

5.1 Methods In evaluating the two properties, our firm conducted site visits to observe current conditions, and completed thorough neighbourhood analyses to understand the existing and future land uses, and built form of the surrounding streetscapes and communities. These evaluations provided our firm with key information which helped guide further analysis.

Secondly, 2032 Consultants used SketchUP software to generate 3D massing models to display how potential developments at each case study site would fit into their respective area context. Our massing models established measurable data, namely gross floor area (GFA) and net internal area (NIA), of the potential redevelopment structures which was later applied to our pro forma analyses. This design work applied best practices including the City of Toronto’s mid-rise and tall building performance standards, as applicable, including their integration into the pedestrian realms, shadowing effects on adjacent lands, and transition into surrounding neighbourhoods.

Finally, our pro forma analyses of the Danforth and Erskine sites determined the feasibility of redeveloping the two properties given the current regulatory context. The pro formas applied estimated project costs and weighed them against estimated revenue sources to determine the potential profitability of each site. These financial analyses were done twice for each site: once in applying the City of Toronto’s rental housing demolition and conversion policies, and again without applying said policies.

Combining these methods of site evaluation, 2032 Consultants was able to formulate a series of potential policy recommendations related to the rental housing demolition and conversion in the City of Toronto.

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6 2375-2385 Danforth Avenue

(Source: Devin Matheson. (2016). 2375-2385 Danforth Avenue: inner courtyard)

(Source: Devin Matheson. (2016). 2375-2385 Danforth Avenue: looking to the east)

(Source: Devin Matheson. (2016). 2375-2385 Danforth Avenue: back of building and parking lot)

6.1 Existing Site Conditions The 2375-2385 Danforth Avenue site is approximately 0.35 hectares, with dimensions of 58 metres along the south side street frontage and 61 metres to the rear of the property. The site is comprised of three four-storey buildings at the back of the property and a pair of two-story buildings closer to the roadway, all built around a central landscaped courtyard area. Combined, the five buildings house 33 rental dwellings and each of these units is provided with one on-site parking space.

Typically, during the rental housing demolition application processes, municipal employees would conduct a site visit to record the number and types of dwellings, and to measure the size of the units. Alternatively, 2032 Consultants used satellite imagery to measure the approximate floor plates of the collection of buildings and determine their cumulative GFA (Figure 1). We assumed an 80 percent efficiency rate to determine the NIA which represents the livable area of the building.

2032 Consultants utilized CMHC zone averages to determine the unit type distribution among the 33 dwellings (Figure 2). According to online postings, rental rates for two bedroom units at 2375-2385 Danforth Avenue begin at $1115 while the three bedroom unit is listed at $1305. These rates are classified as “affordable” by the CMHC whose semi-annual statistics are considered the industry standard and are recognized by the OP. Consequently, redevelopment of the property would require the replacement of all 33 units.

Existing Building FiguresGFA (sq. ft) 26,500Net Internal Area (sq. ft) 21,200Rental Units 33Average Rental Size (sq. ft) 642Current Monthly Rent Per sq. ft $1.80

Figure 1: Existing Building, 2375-2385 Danforth Avenue

Bachelor 21-Bedroom 182-Bedroom 123-Bedroom 1Total 33

Existing Building BreakdownFigure 2: Existing Unit Count, 2375-2385 Danforth Avenue

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6.2 Neighbourhood Context and Surrounding Uses 2375-2385 Danforth Avenue is located in the City of Toronto’s Danforth Village neighbourhood, with close access to a wide range of services and amenities. The property sits on a block framed by Danforth Avenue to the north, Westlake Avenue to the east, Stephenson Avenue to the south, and Morton Road Road to the west. The nearest major intersection is approximately 300 metres east of the site at Danforth Avenue and Main Street while Danforth meets Woodbine Avenue, 600 metres west of the site. Located on a City of Toronto designated Avenue and zoned commercial with mixed-use allowance, the property sits within an intensification corridor as identified by the Growth Plan. Redevelopment proposals on the site would invariably be subject to mid-rise design standards as established by the municipality. Surrounding Uses • To the north: Low-rise commercial with one- storey residential above, vacant lots • To the south: Low-rise residential uses, parking accessed by laneway • To the west: Mid-rise condo development site (2359 Danforth Avenue development) • To the east: Low-rise commercial, with low rise residential to the southeast

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Access to Local Services

The Danforth Village neighbourhood and its surroundings offer a diverse set of services and amenities, demonstrating that intensification of the 2375-2385 Danforth Avenue property can be adequately supported

Grocery Stores• Vincenzo Supermarket -30 m• Sobeys - 100 m• Janny’s Fruit Market - 200 m• Choo’s Garden Supermarket - 500 m SchoolsToronto District School Board• Gledhill Junior Public School (GR. JK-6) - 350 m• Earl Beatty Junior and Senior Public School (GR. JK-8) - 1.3 km• Monarch Park Collegiate Institute (GR. 9-12) - 1.7 km• Danforth Collegiate and Technical Institute (GR. 9-12) - 2.4 km

Toronto Catholic District School Board• St. Brigid Catholic Elementary School (GR. K-8)- 1.1 km• Notre Dame Catholic High School (GR. 9-12) - 1.7 km Community Services• Toronto Fire Station 226 - 1.1 km• Toronto East General Hospital - 2.2 km• Toronto Police Service 55 Division - 2.9 km Libraries• Toronto Public Library, Main Street Branch - 900 m• Toronto Public Library, Danforth/Coxwell Branch - 1.3 km Open Space, Parks and Recreational Facilities• Stephenson Park - 260 m• Stanley G. Grizzle Park - 300 m• Main Square Community Centre - 500 m• Coleman Park - 650 m• East Toronto Athletic Field - 650 m• Gledhill Park - 700 m• Ted Reeve Community Area - 750 m Places of Worship• Danforth Gospel Hall - 280 m• Church of the Nazarene - 600 m• Calvary Baptist Church - 1.2 km• Toronto Chinese Mennonite Church - 1.5 km• St. John’s Catholic Church - 1.8 km

6.3 Transportation and Transit System Access Pedestrian and Bicycle Networks The Danforth Village neighbourhood is an attractive locale for pedestrians with a walking score of 94. The study site scores 70 for bikeability and is accessible to Toronto’s downtown in approximately 33 minutes by bicycle. In cooperation with the Danforth Village Business Improvement Area (BIA), the City of Toronto made significant improvements to the majority of the pedestrian realm between Woodbine and Victoria Park Avenues during the summer of 2014, building new sidewalks with a decorative paved edge, adding more pedestrian lighting, planting new trees and creating planting beds with decorative features. These efforts have contributed to making the neighbourhood an attractive area for further redevelopment and intensification that reflects Toronto’s mid-rise design guidelines. Transit Networks The Danforth case study site is well connected to multiple public transportation options including subways, streetcars, buses, and regional rail. 2375-2385 Danforth Avenue has a transit score of 92, and is accessible to downtown Toronto in 34 minutes by TTC. The property is located along the Bloor-Danforth TTC subway line with the Main Street Subway Station located 400 metres east of the site and Woodbine Station 650 metres west of the site. Originating from the Main Street Subway Station, residents of the Danforth Village community have access to the 306 and 506 Carlton TTC Streetcar lines while ten bus routes are accessible in the vicinity of the case study site. Regional transit is also available via the Danforth Go Station, only 850 metres east of the property. This plethora of transportation options makes the 2375-2385 Danforth Avenue site a favourable candidate for intensification.

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Danforth Station

Main Street Station

Woodbine Station

0 200 400m

Legend

Case Study Site

Schools

Recreation

Grocery Store

Place of Worship

N

500m

Subway Station

GO Station

Road Networks The 2375-2385 Danforth study site fronts the south side of Danforth Avenue, a major east-west arterial road connected to Bloor Street at its west end and Kingston Road at its east terminus. Access to the Don Valley Parkway is available at both the Danforth and Don Mills interchanges, both approximately 4.5 kilometres away. By car, downtown Toronto can be reached in approximately 22 minutes from the case study site. Finally, laneway access to the site is available along the south side rear of the property via Morton Road, allowing service and parking access to be better concealed from the public realm. 6.4 Justifying Intensification The 2375-2385 Danforth site is situated along an intensification corridor according to the Growth Plan and a designated Avenue as stipulated by the City of Toronto. Existing services and amenities in the Danforth Village community and the multi-modal transit options located in close proximity to the property demonstrate that the neighbourhood is capable of adequately supporting increased density. As the current density levels of the case study site sit below the provincial intensification targets for this corridor, it would be prudent to allow redevelopment of the site in accordance with mid-rise design guidelines.

(Source: Erica Liu. (2016). Access to Local Services within a 500 meter radias of 2375-2385 Danforth Avenue)

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6.5.1 Planning Rationale 2032 Consultants created a 3D massing model using SketchUp design software that depicts a proposed ten-storey mid-rise structure at 2375-2385 Danforth Avenue. A seven-storey street wall fronts onto Danforth Avenue with a ten-storey wing projecting south towards the rear of the property. The total GFA of the proposed structure is 14,599 square metres (157,132 square feet).

The zoning designation for the property is mixed-use commercial, which permits a wide variety of uses under the official plan including high density residential and commercial. It is additionally located along a designated Avenue and is accordingly subject to the City of Toronto’s mid-rise performance standards. In building this massing model, 2032 Consultants considered both the best practices for mid-rise design and the precedence set in the approved design for 2359 Danforth Avenue, a predeveloped site to the immediate west our our case study property.

Performance standard #1 states that the height of a mid-rise building should not exceed the width of the right-of-way that it fronts onto. Additionally, the desired height of the streetwall is set at 80 per cent of the right-of-way. Our proposed building is 22.5 metres tall along its seven-storey street wall and 31.5 metres at its maximum height. A terraced step back from the seventh floor to the above three floors will limit the effects of the increased height on the pedestrian realm below. While these heights surpass Danforth Avenue’s 27 metre right-of-way, both heights are reflective of the design of 2359 Danforth. In creating a continuous street wall between the two developments our firm is meeting another element of Toronto’s performance standards. We feel that given the approved design of our neighbouring property and the terraced step backs on the upper three levels of our model, this design meets the intent of the mid-rise performance standards while achieving an appropriate density in line with the Growth Plan.

Performance standard #3 sets out minimum heights for ground floors of buildings. This mandates that the floor be a minimum of 4.5 metres tall, to accommodate retail uses and provide sufficient clearance for loading areas. Our firm’s model

meets this guideline, by providing a 4.5 metre height floor throughout first floor of the building.

Performance standard #4A sets out standards limiting shadowing effects on adjacent lands, and states that a minimum of five hours of daily sunlight must be available along the sidewalk opposite a proposed mid-rise structure between March 21 and September 21 each year. According to our sun/shadow study, our massing model meets this standard.

Performance standard #4B aims to maintain an appropriate pedestrian scale at street level, especially for mid-rises fronting onto streets with larger right-of-ways. As previously mentioned, our model depicts a three metre stepback between the seventh and eighth storeys, in excess of the desired 1.5 metre stepback outline in the performance standards. In breaking up the mass of our model’s street wall, our design ensures that the building presents a reasonable scale to the street.

Performance standard #5A regulates the rear transition of a mid-rise building to neighborhoods on deep lots. As the proposed building is on a deep lot and backs onto neighborhoods designated lands to the south and east, special thought was put into ensuring proper separation and the minimization of negative effects on these areas.

A 45 degree angular plane from the property lines of these homes to the top of our massing model was employed to ensure that an appropriate transition was created. Along the south property line, a 10.5 metre setback was created, including the existing laneway, allowing the model to rise three storeys at the end of the south wing of the model. Terraced three-metre stepbacks between each subsequent floor maximized the height of the ten-storey wing while remaining in line with the 45 degree transitional plane. A large 33 metre setback between the east side of the wing and the east property line limited the external effects on the neighbourhood lands. This is well in excess of the guideline’s requirements, which requires only a 7.5 metre setback with a 45 degree angular plane then beginning 10.5 metres from ground level on the building.

23(Source: Cale Vanderveen. (2016). 2375-2385 Danforth Avenue Massing Model) 23

Performance Standard Guideline ProposedBuilding Height 27m (Street ROW) 22.5/31.5mFirst floor height 4.5m 4.5mEast Neighborhoods Setback 7.5m 33mAngular Plane from South 45° above 10.5m 45° above 10.5mStep-back depth 1.5m 3mStep-back height 7 floors 7 floors

Figure 3: Design Guidelines for 2375-2385 Danforth Avenue

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6.5.2 Shadowing Study Buildings taller than 20 metres may be subjected to a sun/shadow study as part of their development proposal. As such, after completing our massing model, our firm used the shadow modelling function in the SketchUp program to measure its effects on the adjacent streetscape, particularly the sidewalk along the north side of Danforth Avenue. The proposed development allows sunlight to reach most of the opposite sidewalk after 12 pm, and entirely after 2 pm.

This satisfies the mid-rise performance standards that require that five hours of daily sunlight is available on opposite sidewalks between the spring and autumn equinoxes around March 21 and September 21, respectively. Shadowing impacts on neighbourhood properties east of the case study site are not felt until 4 pm between these dates. Our firm deems these minor shadow impacts to be acceptable.

(Source: Cale Vanderveen. (2016). Shadowing Study for 2375-2385 Danforth Avenue for March and September at various times)

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GFA (sq. ft.) 157,132Net Internal Area (sq. ft.) 125,705Rental Replacement (sq. ft.) 21,200Commercial Space (sq. ft.) 11,130Usable Space Less Rental + Commercial (sq. ft.) 93,375Rental Replacement Units 33Total Units 145

New Building Figures

Figure 4: 2375-2385 Danforth AvenueNew Proposal

Bachelor 81-Bedroom 782-Bedroom 523-Bedroom 7Total 145

New Building Units

Figure 5: Unit Count for 2375-2385Danforth Avenue

Current Rental Replacement Policy Effective

Rental Replacement Policy not Effective

Total Costs $63,072,718 $63,072,718Revenue $59,752,575 $64,706,087Projected Profit -$3,320,143 $1,633,369

Figure 6: Pro Forma Results for the Proposed Danforth Site

6.5.3 Regulatory Adjustments to Obtain Development Approval The site at 2375-2385 Danforth Avenue is currently zoned mixed-use commercial with a maximum Floor Space Index (FSI) of 3.0. As the proposed density of our massing model is 4.05 FSI, above the current permissible level, a rezoning of the property will be required to permit the construction of the development. In addition to a rezoning, site plan approval will be required to construct the structure. Our firm’s proposed building meets most of the mid-rise performance standards and otherwise reflects the approved design of 2359 Danforth, immediately west of our study site. Additionally, the massing model reflects the goals and objectives of the Official Plan, particularly as they relate to intensification of along the Avenues, meaning that an OP amendment will not be required.

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6.6 Danforth Avenue Site Pro Forma Having calculated both the maximum potential floor areas given the current design guidelines and zoning standards, as well as the total floor space and unit count that needs to be replaced, 2032 Consultant performed a pro forma analysis to determine the financial feasibility of redeveloping the 2375-2385 Danforth Avenue site given the current rental replacement policy context. All of the assumptions that were made as part of our pro forma are attached as Appendices 1.1 and 3. Similarly, the calculation of the development charges, the full pro forma and development charges explanation are attached as Appendices 1.2, 1.3 and 4, respectively.

Our firm created pro formas reflecting three different scenarios: one, applying current rental housing demolition and conversion policies; a second, without applying said policies; and a third using our recommended sliding scale replacement ratio. The sliding scale replacement will be further explained in Section 10.3.

As the current site is zoned for mixed-use, the ground floor has been designated for commercial space. For simplicity’s sake, we calculated the value of the commercial space and the rental units that are being replaced using capitalization rates and Net Operating Incomes and included them as being sold off in the first year, shown in Appendix 1.3. The breakdown of the floor space and the distribution of unit types being proposed in the new development are included in FIG 4 and 5. These unit counts include rental replacements. Figure 6 summarizes the total costs, revenue and projected profit in one scenario where the current one-for-one rental replacement policy is applied and a second foregoing the current replacement policies.

As Figure 5 shows, given the current regulatory context of full replacement, the redevelopment of 2375-2385 Danforth Avenue would have a potential loss of approximately $3.32 million,

making the project unfeasible. Consequently, this site would not be redeveloped and would therefore fail to contribute to meeting intensifications targets along the Danforth corridor.

To better understand the financial impact created by Toronto’s current rental replacement policies, we created another pro forma that completely disregarded the need for replacement units. As the cost of construction is the same in both scenarios, only the revenue and results are altered. The complete removal of the one-for-one replacement policy would make the project financially feasible, albeit only marginally, with a potential profit of $1.6 million. Ultimately, rental replacement policies account for a $4.9 million difference in potential profits between the two scenarios.

We used Internal Rate of Return (IRR) to further demonstrate the potential profitability of the site. By definition, Internal Rate of Return is a discount rate that makes the net present value of the cash flow from the development project equal to zero. Therefore, a positive IRR reflects higher returns from the capital invested. Additionally, the higher the IRR of a project, the more desirable it is to conduct the development project. We assumed that for both proposed case study site projects the developer would invest 25 per cent of the total cost from the construction phrase, and use capital invested plus profit from sales to estimate final year’s cash flow.

Shown in Appendix 1.4, with current rental policies in effect, the project will have a negative return rate to their capital invested, at - 22.3 per cent. If the rental policy were completely removed, the project will be able to have a positive but marginal return, at 3.1 per cent. Regardless, the financial feasibility of redeveloping this site under the two different contexts helps provide an understanding of the financial impacts of the policies and regulations as they are currently written.

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7 165 Erskine Avenue

(Source: Mike Bennett. (2016). 165 Erskine Avenue: north side of building)

(Source: Mike Bennett. (2016). 165 Erskine Avenue: south-west corner of building)

(Source: Mike Bennett. (2016). 165 Erskine Avenue: west laneway)

7.1 Existing Site Conditions This rectangular site is roughly 0.17 hectares, with approximate property dimensions of 30 metres along its frontage by 57 metres to the rear. The property is located within an Apartment Neighborhoods designated area under the OP, with a permitted density of 2.0 FSI and maximum height of 10.0 metres. As the current structure appears to meet zoning regulations through legal nonconforming uses, any significant modification to the site (such as redevelopment) will likely require rezoning.

Across its four levels, there are a total of 40 existing rental units in the building, consisting of nine bachelor apartments and 31 one-bedroom units. Rental rates begin at $950 for the bachelor units, and rise to $1385 for the larger one bedroom units. These units all fall under the mid-range price point as defined by the City of Toronto, and require replacement upon demolition. The units vary in size between 38.4 and 67.7 square metres, or 414 and 730 square feet. These figures were pulled directly from the the apartment complex’s website. The full breakdown of the existing floor space, and unit counts to be replaced is shown in Figure 7 and 8.

GFA  (sq. ft.) 31,282Net Internal Area  (sq. ft.) 23,908Rental Units 40Average Rental Size  (sq. ft.) 598Current Monthly Rent Per sq. ft. $1.80

Existing Building Figures

Figure 7: Existing Building, 165 Erskine Avenue

Bachelor 91-Bedroom 31Total Units 40

Existing Building BreakdownFigure 8: Existing Unit Count, 165 Erskine Avenue

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7.2 Neighbourhood Context and Surrounding Uses

165 Erskine Avenue is located approximately 750 metres northeast of the intersection of Yonge Street and Eglinton Avenue and approximately 500 metres northwest of the Mount Pleasant and Eglinton intersection. The property sits on a block framed by Erskine Avenue to the north, Mount Pleasant Avenue to the east, Broadway Avenue to the south, and Redpath Avenue to the west. While this site is not adjacent to an area designated Avenues under the OP, it is located within the area identified for intensification by both the provincial Growth Plan and the City’s Yonge and Eglinton Secondary Plan.

Surrounding Uses • To the north: Upper Canada Court, Redpath Avenue Parkette, apartment complex • To the south: Apartment buildings, parking lots • To the west: Parking lots, Betsy Balega entertainment (the historic building) • To the east: Low-rise residential, rental apartments

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Access to Local Services

The site at 165 Erskine Avenue is located in proximity to a variety of services that members of the community can easily access further demonstrating that intensification of the 165 Erskine Avenue property can be adequately supported.

SchoolsToronto District School Board• Eglinton Junior Public School (GR. JK-6) - 650 m• John Fisher Junior Public School (GR. SK-6) – 500 m• Hodgson Senior Public School (GR. 7-8) - 1.4 km• Northern Secondary School (GR. 9-12) – 300 m• North Toronto Collegiate Institute (GR. 9-12) - 500 m

Toronto Catholic District School Board• St. Monica Separate School (GR. K-8) - 550 m• Marshall McLuhan Catholic Secondary School (GR. 9-12) - 1.7 km

Community Services• Anne Johnston Health Station – 700 m• Toronto Fire Station 134 – 800 m• Toronto Police Service - 53 Division – 1.2 km• Holland Bloorview Kids Rehabilitation – 2.3 km• Sunnybrook Health Sciences Centre – 2.0 km

Libraries• Toronto Public Library - Northern District Library – 1.0 km• Toronto Public Library - Mount Pleasant Library - 1.1 km• Toronto Public Library – Locke – 2.0 km• Toronto Reference Library – 5.3 km

Open Space, Parks and Recreational Facilities• Redpath Avenue Parkette - 130 m• Sherwood Park – 500 m• Charlotte Maher Park – 1.2 km• North Toronto Memorial Arena – 1.3 km• North Toronto Memorial Community Centre – 1.5 km

Places of Worship• Christian Reformed Church – 800 m• St. Clement’s Eglinton Church – 900 m• Blythwood Road Baptist Church – 1.0 km• Church of the Transfiguration – 1.1 km• Covenant Baptist Church – 1.3 km• Eglinton Avenue Gospel Hall – 1.4 km• German United Church – 1.7 km

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7.3 Transportation and Transit System Access

Pedestrian and Bicycle Networks The site at Erskine Avenue is situated within an appealing context for pedestrians and has a walking score of 87. The site scores 88 for bikeability and is accessible to Toronto’s downtown core by bike in approximately 29 minutes. Enabled by the Yonge-Eglinton Secondary Plan, Erskine Avenue is poised to further improve its public realm as it is proposed to become a greenway. The plan is looking to improve upon the narrow, less than 2 metre wide, sidewalks which are interrupted by driveway curb cuts that are framed with weak landscaping, and on-site driveway loops. The area will foster a more robust tree canopy, uninterrupted sidewalks, drop-off loops, and greater space for planting. These efforts will further contribute to making the neighbourhood an attractive area for further redevelopment and intensification that reflects the goals and objectives of the Yonge-Eglinton Secondary Plan. Transit Networks The Erskine case study site is well connected to multiple public transportation options including subways and buses. 165 Erskine Avenue has a transit score of 87, and is accessible to downtown Toronto in 35 minutes via the Yonge Subway. The property is located in proximity to the Yonge-University-Spadina TTC Subway line with the Eglinton Subway Station located 1.0 kilometer southwest of the site. Originating from the Eglinton Subway Station, residents of the Yonge-Eglinton community have access to seven bus routes, and an additional two lines within the proximity to our study site.

Residents of the community will also have future access to the Eglinton Crosstown LRT which is slated to begin customer service in 2021. Stops along the LRT Line within walking distance from 165 Erskine Avenue will be at Eglinton’s intersections with Yonge Street and Mount Pleasant Road. The abundance of current and future transit options offers a great incentive for the intensification of 165 Erskine Avenue.

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(Source: Erica Liu. (2016). Access to Local Services within a 500 meter radias of 165 Erskine Avenue)

Eglinton Station 0 200 400m

Legend

Case Study Site

Schools

Recreation

NSubway Station

500m

Road Networks The Erskine Avenue study site fronts the south side of Erskine Avenue, an east-west collector road which is connected to Redpath Avenue and Yonge Street to the west, and Mount Pleasant Road to the east. By car, downtown Toronto can be reached in approximately 18 minutes from the case study site. Access to the region’s highway system is available through the Allen Expressway, which is approximately 4.0 kilometres west of the site.

7.4 Justifying Intensification The Erskine Avenue property is an ideal site for intensification. The Yonge and Eglinton neighbourhood has been identified by the province as an urban growth centre that can accommodate intensification. This is largely encouraged due to the community’s abundant transit connections and the substantial provision of services and amenities. Similarly, the Toronto’s Yonge and Eglinton Secondary Plan has also emphasized the importance of utilizing this neighbourhood to hit intensification targets. This desire for intensification is evident in the number of new developments currently under construction in the area. While our firm’s massing model is somewhat constrained by the nearby neighbourhood designated lands, any proposed redevelopment project for this site should increase the density and help meet provincial intensification targets.

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7.5 Massing Models

7.5.1 Planning Rationale 2032 Consultants’ massing model for the 165 Erskine Avenue site depicts a proposed 23 storey residential tower with a total GFA of 16,906 square metres (181,910 square feet). The site is designated under the official plan as an Apartment Neighborhoods, which permits the construction of multi-family dwellings in a high density, tower form. The height and GFA of our massing model are steered by the performance guidelines listed in the City of Toronto Tall Building Design Guidelines, constrained primarily by setback and floor plate regulations.

Section 3.1.1 - Base Building Regulations regulates the design of the lower floors of the building. Policy (a) states that the base of a tall building should align with the height of the surrounding street wall. Our massing model meets this guideline in providing a 10.5 metre podium height which includes a 4.5 metre ground floor and two additional floors above. This podium height would effectively integrate the proposed building with the pedestrian realm and matches the approximate height of a three-storey apartment building directly across the street.

Policy (b) regulates the maximum height of the base buildings. The base building height may not exceed 80 per cent of the right-of-way width of the road it fronts onto, though 3 metre stepbacks can be utilized to add extra height beyond the usually 80 per cent level to a maximum height of 24 metres. 2032 Consultants propose a base building height of 16.5 metres with a 7.6 metre stepback terrace located at a height of 10.5 metres, all well within the guidelines regulations. This extra stepback width ensures that the tower portion of our massing model more closely matches the frontages of the adjacent buildings to the west and east, including the historically listed Americana Apartments at 141 Erskine Avenue.

Section 3.1.3 - Minimum Ground Floor Heights regulates the minimum floor height of the ground level. A minimum ceiling height of 4.5 metres must be

provided, regardless of the proposed use. This is used to ensure desirable (or to protect for desirable) retail spaces - even if a future conversion of residential uses is required. The proposed building meets this regulation, providing a floor to ceiling height of 4.5 metres.

Section 3.2.1 - Maximum Floorplate Regulations of the guidelines details the maximum floor plate of a tall building. For the tower portion of a building, the floor plate cannot be larger than 750 square metres. Despite typical floor plates in the area regularly exceeding this, including new construction, a 575 square metres floor plate has been proposed to comply with the guidelines. This smaller floor plate also minimizes the impact of the smaller setbacks from adjacent buildings to the east and west.

Sections 3.2.3 - Minimum Tower Separation regulates the minimum separation of the tower portion of the building from other towers. This is done through either a 12.5 metre setback from side and rear property lines, and a 25 metre minimum separation between towers on the same site. Given the physically narrow shape of the site, strict adherence to the side setback requirement was not possible and a zoning amendment would need to address this issue. Acknowledging the constraints of this property, 2032 Consultants made concessions in our massing model, reducing the tower floor plate significantly below the usual maximum square footage. This decision served to create an appropriately sized structure that would not overwhelm the existing built form of the neighbourhood.

As presently designed, the tower portion of the massing model is separated from adjacent buildings by 12.7 metres to the east and 17 metres to the west. The south tower separation is currently 31 metres, an additional concession made beyond the required 25 metres in order to design an appropriately sized model given our site’s constraints.

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33(Source: Cale Vanderveen. (2016). 165 Erskine Avenue Massing Model)

Figure 9: Design Guidelines for 165 ErskineAvenueStandard Guideline ProposedBase building height (no setback)

16m (80% of street ROW) 10.5m

Minimum setback for base building 3m 7.6mHeight of base building (total)

20m (ROW of street) 16.5m

First floor height 4.5m 4.5mTower separation (south) 25m 31mBuilding separation (east) 25m 12.7mBuilding separation (west) 25m 17mFloorplate 750m2 575m2

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(Source: Cale Vanderveen. (2016). 165 Erskine Avenue Shadowing Study for March and September at various times)

7.5.2 Shadowing Study Given the proposed building’s height exceeding the 20 metre threshold, we subjected our massing model for the Erskine Avenue site to a sun/shadow study to measure its effects on adjacent properties and lands, particularly the neighbourhood lands east of Mount Pleasant Road. The height of the proposed development was designed along a 45 degree transitional plane to the edge of neighbourhood lands, limiting the afternoon shadow impacts on the community. In evaluating its shadowing effects during both the spring and autumn equinoxes, as demonstrated by shadow study function on SketchUp, it is clear that the neighbourhood lands are afforded continuous sunlight until approximately 2 pm. This easily meets the required five hours of available sunlight for the nearby neighbourhood lands, as stipulated in the sun/shadow study guidelines.

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GFA (sq. ft.) 181,910Net Internal Area (sq. ft) 145,528Rental Replacement (sq. ft) 23,908Usable Space Less Rental (sq. ft) 121,620Rental Replacement Units 40Total Units 197

New Building Figures

Figure 10: New Building, 165 Erskine Avenue

Bachelor 351-Bedroom 1122-Bedroom 443-Bedroom 6Total Units 197

New Building BreakdownFigure 11: Unit Count, 165 Erskine Avenue

Current Rental Replacement Policy Effective

Rental Replacement Policy not Effective

Total Costs $69,524,530 $69,524,530Revenue $86,650,350 $94,455,000Projected Profit $17,125,820 $24,930,470

Figure 12: Pro Forma Results, 165 Erskine Avenue

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7.5.3 Regulatory Adjustments to ObtainDevelopment Approval The site is currently zoned residential with a maximum density of 2.0 FSI. As the proposed density of our massing model is 9.77 FSI, above the current permission, a rezoning of the property will be required to permit redevelopment. In addition to a rezoning, a site plan approval will be required to build on the property. 2032 Consultants has proposed a building for the 165 Erskine property that would meet the goals and objectives of the OP, while contributing to the intensification of the Yonge-Eglinton Secondary Plan area at the City of Toronto’s behest. Likewise, the massing model helps the province achieve its intensification targets for the Yonge-Eglinton Growth Centre as listed in the Growth Plan.

While the height and density meet the current standards and criteria, adjustments will be needed to accommodate our side yard setbacks and building separation as a result of the site’s physical constraints. Our proposal has provided concessions in the way of a larger rear yard setback and building separation than required, as a way to mitigate the impacts of our reduced side yard setbacks and building separation.

7.6 Erskine Avenue Site Pro Forma Analysis Having calculated both the maximum potential GFA given the current tall building design guidelines and zoning standards, as well as the total floor space and unit count that needs to be replaced, 2032 Consultants performed a pro forma analysis to determine the financial feasibility of redeveloping at 165 Erskine Avenue. The proposed features depicted in the Erskine Avenue massing model are listed in Fig 9. All assumptions that were made as part of our pro forma analysis are included in Appendices 2.1 and 3. The calculation of the planning application fees and the full pro forma are attached as Appendices 2.2 and 2.3, respectively.

Due to its location on a collector road, redevelopment of 165 Erskine Avenue will not include a commercial component at ground level. For our pro forma, we have put a value on the rental component of this development based on capitalization rates and Net Operating Incomes. This component has then been assumed to be sold of in the first year. The breakdown of the floor space and the distribution of unit types being proposed in the new development are included as Fig 10. These unit counts are inclusive of the rental replacement units. The pro forma is attached below as Figure 11.

Repeating the approach used in our financial analysis of the Danforth Avenue study site, 2032 Consultants completed one pro forma for our proposed redevelopment at 165 Erskine Avenue with full application of Toronto’s rental housing demolition and conversion policies including one-for-one replacement of all lost dwelling units, and a second pro forma in which said policies are entirely disregarded. In both circumstances, the potential profit of redeveloping the property was substantial Figure 12. While the municipal rental replacement policies did not create any barriers for redeveloping the site, the replacement of all lost units would reduce the potential profit by approximately $7.8 million.

In terms of the IRR of the Erskine Avenue site, we found that the project would likely be profitable with or without the enforcement of current rental replacement policies. Shown in Appendix 2.4, the IRR is estimated to be 104 per cent with current rental policies enforced. The rental policies would reduce the profitability of the project, but the return is still desirable. In this instance it appears that the regulatory context does not have a prohibitive impact on the financial feasibility of redeveloping this site. The potential revenues generated in this case are shown in Figure 12.

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8 Field Research

2032 Consultants expanded upon our preliminary research of rental housing demolition and conversion policies in conducting interviews with City of Toronto staff, and completing SketchUP software and Pro forma tutorials with our clients at Bousfields and Menkes.

8.1 Interviews with Municipal Staff

8.1.1 Strategic Initiatives, Policy and Analysis – City of Toronto 2032 Consultants met with Jeremy Kloet and Lauralyn Johnston from the City of Toronto’s Strategic Initiatives, Policy and Analysis department on February, 24, 2016. The meeting, which was organized through Bousfields, allowed our firm to ask questions related to the municipality’s rental housing replacement and conversion policies and to better understand the rationale for implementing and enforcing their conditions. During our discussion, Mr. Kloet and Ms. Johnston explained that the City views the policies as a means of maintaining Toronto’s stock of affordable rental housing units and further, could be considered an anti-gentrification intervention. Through this communication, our firm gained a greater understanding of the City of Toronto’s relationship with local development firms and the degree of flexibility used in enforcing these policies. Generally speaking, the one-for one policy is enforced as written, though in some rare cases the municipality has allowed for flexibility in the replacement of demolished rental units with respect to the size and type of the new units. Incorporating the feedback offered by the City, our recommendations take into account how the city deals with rental replacement policies. 8.1.2 Affordable Housing Office – City of Toronto Our meeting with Erik Hunter, Manager of Policy and Partnerships at the Affordable Housing office gave us with interesting insight into how affordable housing is provided in the municipality and the relationship which exists between the various governmental bodies in addressing this issue. The interview did not revolve around rental replacement policies, but rather how the issues of

affordable housing are handled by City of Toronto staff. Since purpose-built rental units are a part of the affordable housing umbrella it is important to understand how maintaining and preserving these units occurs and why the policies attempt to preserve the current rental housing stock. 8.2 SketchUp Tutorial Bousfields hosted 2032 Consultants on March 3, 2016 for a SketchUp 3D modelling software tutorial, led by Tom Kasprzak, a partner and urban designer at the firm. Mr. Kasprzak provided our team with an overview of how to generate 3D massing models that reflect the applicable policies and best practices that would guide the design of redevelopment proposals at each of our case study sites. He created models for both the Danforth and Erskine Avenue sites and explained how the respective site and neighbourhood contexts would likely impact the design, orientation, and density of our final models. Using the information acquired during this tutorial as our starting point, 2032 Consultants’ design team developed our own massing models which were further analyzed through sun/shadow studies and set the foundational data for our pro forma analyses. 8.3 Pro Forma Tutorial In order to determine how the City of Toronto’s rental housing replacement policies influence the feasibility of development, 2032 Consultants met with Jude Tersigni from Menkes. Mr. Tersigni outlined the process of conducting a pro forma analysis which weighs estimated project costs against potential revenues to forecast the financial viability of a development proposal. We applied the knowledge gained during this meeting in creating pro forma assessments for both of our case study sites to demonstrate the functional effects of rental housing replacement policies.

8.4 Comparative Rental Replacement Policies 2032 Consultants reviewed the rental housing replacement policies of several North American municipalities and compared them to

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Toronto’s regulatory framework. In general, we found that the City of Toronto’s rental housing policies were more constrictive than those of other jurisdictions.

Vancouver requires a similar one-for-one replacement for the loss of six or more rental dwellings as Toronto, however Vancouver allows for off site replacement. Additionally, the municipality has used an incentives-driven approach to replace purpose-built rental units, notably allowing for minimum replacement unit sizes as small as 320 square feet. Using this approach, Vancouver has created mainly bachelor and one-bedroom rentals, with larger family dwellings failing to meet the municipality’s proposed target of 25 per cent of new units. These incentive-oriented tactics may conflict with Toronto’s Official Plan objectives in providing a wide variety of housing options.

Comparing American rental housing policies to those of Toronto proved challenging due to two major contextual differences.17 First, our firm noted that vacancy rates for purpose-built rental housing units in American cities were significantly larger than those of Toronto with only Portland, Oregon scoring below the 3.0 per cent threshold in 2015 among the 75 largest metropolitan statistical areas. Second, most American rental housing policies are specifically oriented towards affordable rental housing, which was slightly outside the specific scope of our firm’s report. U.S. cities that were most successful in maintaining their existing rental housing stock did so with significant funding from the state and local levels. In Chicago, where rental unit vacancy was 7.4

17 United States Census Bureau. (2016). Quarterly Vacancy and Homeownership Rates by State and MSA. Retrieved from https://www.census.gov/housing/hvs/data/rates.html

per cent in 2015, financial subsidies and tax incentives drive the maintenance of rental housing stock in the city.18 The City’s Rental Subsidy Program provides annual rental subsidies to owners of qualified buildings that reduces rents on a specified number of units to affordable levels. Tax Increment Financing (TIF) is a popular approach in the city, with the local government designating a geographic area as a TIF district for redevelopment that includes the provision of purpose-built affordable rental units.

2032 Consultants feels that while Chicago’s subsidy program may have some short-term value, if applied to Toronto, it would fail to meet the long-term provincial and municipal goals for the provision of purpose-built rental dwellings. Likewise, TIF would pose issues if applied to Toronto, failing to encourage mixed-income neighbourhood developments desired by the province and city alike and resulting in a more socio-economically segregated municipality.

The case study exercises and policy research undertaken by 2032 Consultants in creating this report have provided us with insight into both the overall effectiveness of Toronto’s rental housing demolition and conversion policies in maintaining the local purpose-built rental housing stock and their consequent effects on the feasibility of development. Considering the limited scope of our two case study evaluations, it would be premature to draw definite conclusions regarding the broad effects of these policies. Additional research on a broader scale is necessary before formulating new municipal policies, however this report represents a strong starting point.

18 University of Texas School of Law Community Develop-ment Clinic. (2007). Preserving Austin’s Multifamily Rental Housing: A toolkit. Retrieved from https://law.utexas.edu/wp-content/uploads/sites/11/2015/11/2007-04-ECDC-Toolkit-Preserving-Multifamily-Housing.pdf

(Source: Mike Bennett. (2016). City of Vancouver)

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9 Research Analysis & Conclusions9.1 Importance of MaintainingRental Stock Our research has demonstrated that there is significant value in the City of Toronto’s rental housing demolition and conversion policies as they are currently written. Because purpose-built rental dwellings have constituted a minimal proportion of local housing starts in recent years, particularly compared to new condominium buildings, maintaining the municipality’s existing stock is critical in improving social equity. While purpose-built rental units are not classified as social housing, they nevertheless represent a relative affordable housing options for local residents, providing midrange and low income units as designated by the CMHC. Our firm maintains that the clear benefits of the city’s current purpose-built rental housing stock should be strongly considered in recommending any changes to the current policies.

9.2 Effect on Feasibility ofRedevelopment Though the City of Toronto’s rental housing replacement and demolition policies demonstrate clear social equity benefits, these policies have impacts on the potential profitability of redevelopment projects in the municipality. Our pro forma analyses of both the 2375-2385 Danforth Avenue and the 165 Erskine Avenue case study properties estimated that in implementing the municipality’s one-for-one replacement policy for lost units the potential profit of redeveloping the sites was reduced by nearly $4.9 million and $7.8 million, respectively, compared to a redevelopment project that did not require any dwelling replacement.

Of the two case study sites, the Erskine Avenue property was best equipped to absorb the cost of rental dwelling replacement due mainly to the ambitious intensification objectives for the Yonge-Eglinton area listed in both the provincial Growth Plan and the municipal Official Plan. In general, larger scale redevelopment projects seem most capable of implementing the replacement policies while still earning an overall profit.

Constrained by the height and density standards of Toronto’s mid-rise design guidelines, the Danforth Avenue demonstrated that smaller redevelopment projects may struggled to overcome the financial costs of rental unit replacement. In applying the current replacement policies, the potential profit of redeveloping the property turned into an estimated loss. Accordingly, our firm can infer that these replacement policies could potentially be the difference between an intensification redevelopment project being financially feasible, or not. These findings have led us to consider an alternate rental housing replacement system in which the amount of units that need to be rebuilt is proportional to the size of the redevelopment project.

9.3 Inconsistency Between City and Provincial Plans Another significant finding of our research was the disconnect between provincial plans for intensification, and municipal policies and regulations controlling rental housing demolition and conversion. As outlined in the Growth Plan, key neighbourhoods and Avenues in the City of Toronto have been targeted for intensification, selected largely for their proximity to transit, and other services and amenities. Several purpose-built residential rental buildings are located within these urban growth centres and intensification corridors, including both of our case study sites.

In instances where zoning restrictions, land use designations, design guidelines, and the municipality’s rental replacement policies combine to limit the feasibility of redeveloping a given property, the City of Toronto may be hindering its ability to meet Ontario’s intensification targets. Should the GFA of a potential redevelopment site be restricted to such a degree that rental dwelling replacement represents a substantial barrier to achieving a potential profit, then in some instances, redevelopment may not occur.

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10 Recommendations

In researching existing rental housing replacement policies and examining their effects on the feasibility of developing two case study sites in Toronto, 2032 Consultants has developed three recommendations for reforming the current system. Each recommendation has been formulated by identifying and analyzing the shortcomings of the current municipal policy and responding proactively. Further study is needed before any changes to these policies are implemented, given the scope of our research and the limitations of our small case study sample size, however, our firm is confident that this final report will provide a strong initial framework. The following recommendations represent potential improvements to the current rental housing demolition and replacement policies in the City of Toronto which consider the various interests of the province, the municipality, and the local development firms.

10.1 ‘Status Quo’ Option The City of Toronto adopted rental housing demolition and conversion policies to assist in preserving the stock of affordable purpose-built rental housing in the municipality.19 The policies have previously been studied by the City to determine whether they are effective in meeting their objectives without being restrictive to redevelopment. Toronto’s research suggests that the rental replacement policies do not discourage redevelopment, and that they are an effective anti-gentrification intervention that maintains residential rental units.

Our two case study sites have provided us with examples of how these policies typically function and their impact on the feasibility of redeveloping sites with potential for intensification. The current rental replacement policies do not have prohibitive effects on the feasibility of redeveloping the site located at 165 Erskine Avenue, though the potential

19 N Barry Lyon Consultants Limited, DTAH. (2012). Potential for Rental Housing Replacement In Mid-Rise Redevelopment Along the Ave-nues. Toronto: City of Toronto.

profitability of redeveloping the site is decreased. In this instance, the policies function as intended, allowing the City of Toronto to maintain their on-site rental dwellings while concurrently allowing for the potential intensification of the property.

2032 Consultants yielded somewhat different results from our second case study site at 2375-2385 Danforth Avenue. In this instance, redevelopment of the site is only marginally feasible if the replacement policy is ignored altogether with a potential profit of nearly around $1.6 million, but in applying the one-for-one replacement policy, redevelopment of the property is not feasible with projected losses of around $3.3 million.

The recommendation to maintain Toronto’s rental housing demolition and conversion policies as currently constructed does not address the challenges in applying the policy on a site-by-site basis. This one size fits all approach is not universally appropriate. Regardless, our firm feels the degree to which the policy may hinder development is generally outweighed by its positive effects in maintaining the purpose-built rental housing stock in the area. This recommendation could also be considered a temporary course of action, while the city or province studies ways to promote the construction of additional purpose-built rental housing, at which point amendments could be considered.

10.2 Payment-In-Lieu The ‘payment-in-lieu of rental housing replacement’ option is our second potential recommendation for altering the current policies. This recommendation proposes that the municipality may, in lieu of accepting the conveyance, require a monetary payment of a predetermined city-wide amount by the property owner to the City of Toronto. Compliance to the affordable housing

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and rental replacement policies is necessary prior to a building permit being issued. This payment-in-lieu by the developers of the land would be placed into an “Affordable Rental Housing Fund” which would be managed and utilized by the City of Toronto’s Affordable Housing Office. This fund will deal only with the construction, repair, and preservation of the affordable rental housing stock, and therefore all developers engaging in rental housing demolition will contribute to the rental stockpile.

Such an amendment to the current policies would allow developers to maximize profits, and would make a wider range of sites feasible for redevelopment, allowing for greater intensification in line with Growth Plan targets. Concurrently, this policy amendment would ensure that the affordable rental housing stock is being addressed.

The municipality would be tasked with procuring the development of new affordable rental housing units to accommodate the urgent local demand, and could utilize the multiple city-owned soft sites in the process. This would also allow the municipality to gauge the local market and build different types of units to address the needs of Torontonians. For example, instead of mandating that developers replace a series of bachelor units from a demolished residential rental building, this funding model would allow the municipality to create more two and three-bedroom units, as needed.

This recommendation draws from the rental replacement policies of Chicago, Illinois where developers are afforded cash-in-lieu alternatives to the direct replacement of demolished residential rental units. The City of Chicago requires compliance with affordable

housing policies in advance of a building permit being issued. The funds collected by the Chicago through the payment-in-lieu method, are allocated to the Affordable Housing Opportunity Fund which deals with constructing, repairing, and preserving affordable rental housing stock.

One issue that our firm recognizes in implementing this proposed policy amendment is the potential spatial segregation of new purpose built rental housing buildings away from Toronto’s desired neighbourhoods. The relocation of tenants from demolished units would pose a significant obstacle in utilizing this tactic and it is likely that this policy would result in the increased displacement of rental unit resident away from their previous neighbourhoods. This could create new social equity concerns in the municipality.

10.3 Sliding-Scale Level of Relief Our firm’s preferred recommendation is to implement a sliding-scale level of relief for rental unit replacement that is contingent on the ratio of the previous building’s GFA relative to the new development’s GFA. By applying a sliding-scale replacement model to redevelopment projects, the policy can better account for site and neighbourhood contexts and respond in a fair and realistic manner.

This recommendation provides a harmonization between developers’ desire to increase the redevelopment potential of various sites, and the municipality’s need to maintain a sufficient supply of affordable rental housing units. At the same time, by increasing the feasibility of redeveloping additional properties, this policy will be beneficial in helping certain growth centres and corridors in Toronto to meet provincial intensification targets.

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This concept is essentially a ratio of the previous built-form’s GFA divided by the proposed development’s GFA. This equation yields a value that indicates the amount of rental housing space that must be replaced in relation to the size of the proposed new development.

When calculating the ratio, the lower the value yielded, the greater the required percentage of rental space to be replaced will be. In contrast, a higher ratio would require less total rental space replacement. The formula for this ratio is shown as follows:

Ratio = Existing GFA/Proposed GFA

We will also note that while the ratio will be based on the GFA, the total number of units to be replaced will be drawn from the floorspace to be replaced using the average unit size of the previous building. For instance, if the policy dictated that 75 per cent of 10,000 square feet (7,500 square feet) of previous rental space had to be replaced, and the average previous rental unit size was 700 square feet, then the developer would be required to replace 11 units (7,500 total square footage / 700 square feet per unit = 10.6, rounded up to 11 units).

The Sliding-Scale recommendation is outlined in a policy framework as follows * :

1. A potential redevelopment site is subject to a sliding-scale ratio replacement should there be six or more rental units currently on site;2. Any information regarding unit size and type of all rental units is a required component of all planning application documents for demolition and redevelopment proposals; 3. If the GFA of the existing rental building is equal or less than 15.0 per cent of the GFA of the proposed development, all the previous rental units must be replaced;4. If the GFA of the existing rental building is between 15.1 per cent to 25.0 per cent of the GFA of the proposed development, at least 75 per cent of the rental floor space must be replaced in the new development project;

* As we have only looked at two sites, it is premature to determine specific thresholds and relief levels without further study. Any figures

listed below are purely for illustrative purposes.

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5. If the GFA of the existing rental units is above 25.1 per cent of the GFA of the proposed development, at least 50 per cent of the rental floor space must be replaced in the new development project;6. The number of units being replaced will be the total number of average unit size, from the previous development, that fit into the reduced rental floorspace. This number will always be rounded up. 7. Rental units must be replaced at the same size and type as they previously existed and to the same standards as

the new market rate units.

Example:

Given that our study only looked at two case study sites, it would be premature for us to finalize definitive thresholds and relief levels for the sliding-scale model, however Figure 13 nevertheless illustrates how this policy could potentially work within the context of our case study sites.

Applying the sliding-scale relief model to our proposed redevelopment of 2375-2385 Danforth Avenue we find that the project would lose an estimated $2.03 million as shown in Appendix 1.3. Despite the potential losses, the sliding-scale model would provide a measure of relief from the current rental replacement policies in the amount of approximately $1.28 million. While the potential redevelopment of the site remains unfeasible, the policy makes any future project more desirable.

The GFA of the proposed building as depicted in our massing model is 157,132 square feet.

The existing rental apartments on-site have a combined GFA of 26,500 square feet, which amasses to 16.8 per cent of the proposed building’s GFA. Using our firm’s sliding-scale example, any development project

at 2375-2385 Danforth would be required to replace 75 percent of the previous rental floor space. Based on our estimate of 642 square foot average unit sizes in the original purpose-built rental buildings, the developer would be required to replace 25 of the original 33 dwellings.

In the case of the 165 Erskine Avenue study site, the ratio of replacement floor space to proposed new floor space is 17.2 per cent. This would afford the proposed development with a 25 per cent rate of relief in the amount of rental floor space that needs to be replaced. This development is quite profitable even in meeting a one-for-one rental housing replacement standard, and it may not seem necessary to developers with any replacement relief in this case. This underscores the need to further study this sliding-scale proposal on a much larger scale and to refine its parameters.

10.3.1 Rationale

As exemplified in its application to the Danforth Avenue site, the sliding-scale relief model does not ensure that all potential redevelopment projects will be feasible. Our firm’s proposed policy changes are not meant to completely tilt the scales in favour of developers at the expense of maintaining local rental housing stock. The policy recommendation does, however, aim to provide a measure of relief that can improve development conditions, but not completely eliminate the replacement of rental units.

In proposing a level of relief that is based on the new project’s ability to absorb the cost of replacing the previous rental units, we are attempting to balance several interests including: provincial plans for intensification; the municipal design guidelines and zoning; and the feasibility of redevelopment projects.

GFA of Previous Building/GFA of Proposed Building (%)

Required Replacement Ratio

Less than 15.0% 100%15.1% - 25.0% 75%25.1% and above 50%

Figure 13: Sample Sliding Scale Replacement Ratios

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11 Final Statement

Jointly commissioned by Bousfields Inc. and Menkes Developments, the urban planning firm of 2032 Consultants has completed a thorough review of rental housing demolition and conversion policies in the City of Toronto. In addition to researching the policies and regulations of Toronto and comparing them to similar policies in other Canadian and American municipalities, the firm conducted two case studies, evaluating the policy’s effects on the feasibility of redeveloping two purpose-built rental housing properties.

Our research leads us to conclude that while these rental replacement policies do provide a valuable service in maintaining the City’s existing rental stock, they are not flawless. Specifically, these policies and regulations can, in some instances, decrease the likelihood that rental properties are redeveloped by reducing the potential profits of these projects. We believe that in these instances, the City of Toronto’s rental housing demolition and conversion policies conflict with the standards of the mid-rise design guidelines and Ontario’s intensification targets as expressed in the Growth Plan.

These observations led us to recommended three possible courses of action: maintaining the policies as currently written; implementing a ‘payment-in-lieu’ model; and our preferred option of a sliding-scale relief model. Our firm believes that a sliding-scale constitutes the most reasonable course of action, providing a measure of relief for developers whose particular projects may not be feasible given the present one-for-one replacement policy. Concurrently, this policy would maintain a significant stock of purpose-built rental housing units in the municipality and in increasing the feasibility of developing certain constrictive sites, would contribute to provincial intensification targets. We feel this approach balances the interests of the development industry, the province and the City of Toronto, and is therefore our preferred recommendation.

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Appendices

Appendix 1.1 Danforth Avenue Site Assumptions

Appendix 1.2 Danforth Avenue Site Development Application Fees

Appendix 1.3 Danforth Avenue Site Pro Forma

Appendix 1.4 Internal Rate of Return (IRR) among Different Scenarios

Appendix 2.1 Erskine Avenue Site Assumptions

Appendix 2.2 Erskine Avenue Site Development Application Fees

Appendix 2.3 Erskine Avenue Site Pro Forma

Appendix 2.4 Internal Rate of Return (IRR) among Different Scenarios

Appendix 3 Pro Forma Assumptions

Appendix 4 Development Charge/ Planning Fee Explanations

Appendix 5 Assumption of Construction Loan and Value of Rental

& Commercial Components

Appendix 6 Terms of Reference - Bousfields Inc.

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Appendix 1.1 Danforth Avenue Site Assumptions

Assumptions Vacancy Rate (Residential) 1.9% Vacancy Rate (Commercial) 5% Inflation 1.5% Operational Expenses per sq. ft. (monthly) 0.5 Building Efficiency 80% Multi-Residential Taxes 1.7265482% Sale Price per sq. ft. $520 Parking Space Price $40,000 Parking Take Up 50% Demolition Rate per sq. ft. $10 Hard Costs per sq. ft. $210 Soft Costs 30% Residential Cap Rate 4% Retail Cap Rate 6% Monthly Rental Rates per sq. ft. $1.80 Monthly Commercial Rates per sq. ft. $2.10 Construction Financing 5% Discount Rate 5%

Existing Building Figures GFA (sq. ft.) 26,500 Net Internal Area (sq. ft.) 21,200 Rental Units 33 Average Rental Size (sq. ft.) 642 Current Monthly Rent per sq. ft. $ 1.80

New Building Figures GFA (sq. ft.) 157,132 Net Internal Area (sq. ft.) 125,705 Rental Replacement (sq. ft.) 21,200 Commercial Space (sq. ft.) 11,130 Usable Space Less Rental + Commercial (sq. ft.) 93,375 Rental Replacement Units 33 Total Units 145

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Appendix 1.2 Danforth Avenue Site Development Application Fees

New Building's Unit Type Breakdown (Rental Replacement Units Excluded)

Percentage of units

Total floor areas (sq. ft.)

Average areas (sq. ft.)

Unit number

Bachelor 5% 2,824 500 6 1 bed 54% 42,181 700 60 2 bed 36% 39,891 1000 40 3 bed 5% 8,479 1400 6

Development Charges (Rental Units Replacement + New Units)

Unit Type Charges per Unit Charges

Rental Units Replacement

33 units $24,073/unit $794,409

Proposed New Building

Bachelor +1 bedroom (66 units)

$16,746/unit $1,105,236

2 bedrooms or more (46 units)

$24,073/unit $1,107,358

Non-Residential uses

$203.07/sq. m. $209,974

Total Development Charges

$3,216,977

Development Application Fees Subject Breakdown Total Zoning Bylaw Amendment Base Fee $17,751

Mixed Use ($3.33/sq. m.) $38,888

Legal service fee for S.37 Agreement $10,183 Development Charges

$3,216,977

Rental Demolition Base Fee $6,529

33 units (261.17/unit) $8,619

Total

$3,298,947

Number of Private Apartment Units Distribution in East York

Number of Units Percentage

Bachelor 938 5%

1bed 10,009 54%

2bed 6,626 36%

3bed 1,006 5%

Total 18,579 100%

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Appendix 1.3 Danforth Avenue Site Pro Forma

Construction Loan Year 0 Year 1 Total Amount to Be Financed $ 59,660,862 Draw $ 29,830,431 $ 29,830,431 Starting Balance $ 29,830,431 $ 61,152,384 Interest $ 1,491,522 $ 3,057,619 New Balance $ 31,321,953 $ 64,210,003

Current Rental Replacement

Policy Effective

Rental Replacement

Policy not Effective

Sliding Scale Policy Effective

Total Project Costs Land Costs $12,000,000 Demolition Costs $265,000 Hard Costs $32,997,628 Soft Costs $9,899,288 Application Fees $3,298,947 Parkland Dedication $1,200,000 Total Costs Before Financing $59,660,862 Construction Finance Interest $4,549,141 Total Construction Costs $ 64,210,003

Revenue Unit Sales $48,555,129 $59,579,129 $51,311,129 Parking Sales $3,040,000 $3,040,000 $3,040,000 Commercial Component

$ 2,086,958 $ 2,086,958 $ 2,086,958 Rental Component $ 6,070,488 $0 $ 4,597,866 Total Revenue $59,752,575 $64,706,087 $61,035,953

Projected Profit ($4,457,429) $496,084 ($3,174,051)

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Rental Units Revenue

Current Rental Replacement

Policy Effective

Sliding Scale Policy

Effective

Number of Rental Units 33 25 Potential Gross Revenue $ 457,920 $ 343,440 Vacancy $ 8,700 $ 6,525 Effective Gross Revenue $ 449,220 $ 336,915 Operational Expenses $ 127,200 $ 95,400 Taxes $ 79,200 $ 57,600 Net Operational Income $ 242,820 $ 183,915 Debt Service $0 $0 Rental Cash Flow $ 242,820 $ 183,915 Value of Rental Properties $ 6,070,488 $ 4,597,866

Commercial Component Revenue First Operational Year Potential Gross Revenue $ 280,476 Vacancy $ 14,024 Effective Gross Revenue $ 266,452 OPEX $ 66,780 Taxes $ 85,000 NOI $ 114,672 Debt Service $0 Commercial Cash Flow $ 114,672

Value of Commercial Portion $ 2,086,958

Appendix 1.4 Internal Rate of Return (IRR) among Different Scenarios

Year 0 Year 1 Current Rental Replacement Policy Effective ($16,052,501) $11,595,072 IRR -27.8% Rental Replacement Policy not Effective ($16,052,501) $16,548,584 IRR 3.1% Sliding Scale Policy Effective ($16,052,501) $12,878,450 IRR -19.8%

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Appendix 2.1 Erskine Avenue Site Assumptions

Assumptions Vacancy Rate 1.8% Inflation 1.5% Operational Expenses per sq. ft. (monthly) 0.5 Building Efficiency 80% Multi-Residential Taxes 1.7265482% Sale Price per sq. ft. $625 Parking Space Price $50,000 Parking Take Up 30% Demolition Rate per Square Foot $10 Hard Costs per Square Foot $240 Soft Costs 30% Residential Cap Rate 3.75% Commercial Cap Rate 6% Monthly Rental Rates per sq. ft. $1.80 Monthly Commercial Rates per sq. ft. $2.10 Construction Financing 5% Discount Rate 5%

Existing Building Figures GFA (sq. ft.) 31,282 Net Internal Area (sq. ft.) 23,908 Rental Units 40 Average Rental Size (sq. ft.) 598 Current Monthly Rent per sq. ft. $ 1.80

New Building Figures GFA (sq. ft.) 181,910 Net Internal Area (sq. ft.) 145,528 Rental Replacement (sq. ft.) 23,908 Usable Space Less Rental (sq. ft.) 121,620 Rental Replacement Units 40 Total Units 197 Existing/New (sq. ft.) 17.20%

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Appendix 2.2 Erskine Avenue Site Development Application Fees

New Building's Unit Type Breakdown (Rental Replacement Units Excluded)

Percentage of units

Total floor areas (sq. ft.)

Average areas (sq. ft.)

Unit number

Bachelor 17% 15,452 500 26 1 bed 52% 67,247 700 81 2 bed 28% 52,455 1,000 44 3 bed 4% 9,210 1,400 6

Development Charges (Rental Units Replacement + New Units)

Unit Type

Charges per Unit

Charges

Rental Units Replacement

Bachelor +1 bedroom (40 units)

$16,746/unit $669,840

Proposed New Building

Bachelor +1 bedroom (107 units)

$16,746/unit $1,791,822

2 bedrooms or more (50 units)

$24,073/unit $1,203,600

Total Development Charges

$3,665,262

Development Application Fees Subject Breakdown Total Zoning Bylaw Amendment Base Fee $17,751

Residential ($6/ sq. m.) $111,758

Legal service fee for S.37 Agreement $10,183 Development Charges

$3,665,262

Rental Demolition Base Fee $6,529

33 units (261.17/unit) $10,447

Total

$3,821,930

Number of Private Apartment Units Distribution in Toronto North

Number of Units Percentage

Bachelor 4,942 17%

1bed 15,362 52%

2bed 8,388 28%

3bed 1,052 4%

Total 29,744 100%

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Appendix 2.3 Erskine Avenue Site Pro Forma

Construction Loan Year 0 Year 1 Total Amount to Be Financed $ 65,763,670 Draw $ 32,881,835 $ 32,881,835 Starting Balance $ 32,881,835 $ 67,407,762 Interest $ 1,644,092 $ 3,370,388 New Balance $ 34,525,927 $ 70,778,150

Current Rental Replacement

Policy Effective

Rental Replacement

Policy not Effective

Sliding Scale Policy Effective

Total Project Costs Land Costs $ 4,430,000 Demolition Costs $ 312,820 Hard Costs $ 43,658,400 Soft Costs $ 13,097,520 Application Fees $ 3,821,930 Parkland Dedication $ 443,000 Total Costs Before Financing $ 65,763,670 Construction Finance Interest $ 5,014,480 Total Construction Costs $ 70,778,150

Revenue Unit Sales $76,012,500 $90,955,000 $79,748,125 Parking Sales $3,500,000 $3,500,000 $3,500,000 Rental Component $ 7,137,850 $0 $5,161,387 Total Revenue $86,650,350 $94,455,000 $88,409,512

Projected Profit $ 15,872,200 $ 23,676,850 $17,631,362

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Rental Units Revenue Current Rental

Replacement Policy Effective

Sliding Scale Policy Effective

Number of Rental Units 40 30 Potential Gross Revenue $516,413 $387,310 Vacancy $9,295 $6,972 Effective Gross Revenue $507,117 $380,338 Operational Expenses $143,448 $107,586 Taxes $96,000 $79,200 Net Operational Income $267,669 $193,552 Debt Service $0 $0 Rental Cash Flow $267,669 $193,552 Value of Rental Properties $7,137,850 $5,161,387

Appendix 2.4 Internal Rate of Return (IRR) among Different Scenarios

Year 0 Year 1 Current Rental Replacement Policy Effective ($17,694,537) $33,566,738 IRR 89.7% Rental Replacement Policy not Effective ($17,694,537) $41,371,388 IRR 133.8% Sliding Scale Policy Effective ($17,694,537) $35,325,899 IRR 99.6%

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Appendix 3 Pro Forma Assumptions

Vacancy RateRental vacancy rates have been taken from the CMHC reports. We used the vacancy rates of Zones 3 and 9 for the Erskine and Danforth sites respectively. These were 1.8 per cent and 1.9 per cent.

Commercial vacancy rate was taken from Colliers International Real Estate reports.

InflationInflation rate was taken from Bank of Canada.

Operating Expenses Assumed at $0.50 per square foot for both retail and residential. This was generally assumed to be an industry standard for condominiums.

Building Efficiency This has been taken from the pro forma provided to us from the clients. The ratio has been verified by several people in the industry as being a reasonable assumption.

Sale Price per Square FootThis estimates were taken from examining new neighbouring residential sales and pricelists.

Parking Price and Take UpThese figures were provided by the client, with the assumption that parking spots would sell for less on the Danforth. This site would also have a higher parking Take Up rate.

Cap RatesThese figures were taken from Colliers International Real Estate reports

Monthly Rental and Commercial RatesThese were taken from looking at the current rental rates of the two rental sites.

The commercial rates were taken from looking at neighbouring properties, with a 15 per cent bump to take into account that this would be a new property.

Demolition CostsThis figure was provided by the client. It is inclusive of the demolition permits.

Hard Costs and Soft CostsThese costs were provided by 2016 construction reports from Altus Group. They are inclusive of the cost of parking.

Parkland DedicationThis rate was provided by the client.

Construction InterestFinance rates were provided by the client as being between 5-7 per cent. It was noted however that with Canada’s low interest rates this would be on the lower side of this range. Even more so, a large reputable builder would almost assuredly receive a more favourable finance rate.

Sources:Altus Group,. (2016). Canadian Cost Guide. Altus Group.

Canadian Mortgage and Housing Corporation,. (2015). Rental Market Report: Greater

Toronto Area. Canadian Mortgage and Housing Corporation (CMHC0.

Retrieved from http://www.cmhc-schl.gc.ca/odpub/esub/64459/64459_2015_

A01.pdf?fr=1458655524496Colliers International,. (2015). Cap Rate Report. Colliers International.

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Appendix 4 Development Charge/ Planning Fee Explanations

The application fee analysis was strictly following the list of Planning Application Fees provided by City of Toronto, effected on January 1, 2016. For both Danforth and Erskine site, zoning by-law amendment were proposed for redevelopment. Zoning by-law amendment was associating with a base fee of $17,751.26 and an additional fee depending on the use of the development. The Danforth site was proposed for residential-commercial use while the Erskine site was pure residential. The additional fees on top of the base fees for non-residential uses was $3.33/sq. m. and for residential uses was 6.00/sq. m.. For all development, the legal service fee for Section 37 agreement (pursuant to Planning Act) was fixed as $10,182.74. Rental housing demolition and conversion fees were based on the rate effected on January 2015, provided by city of Toronto. The base fee for demolition was $6529.15, with an addition of $261.17 for each unit proposed.

Development charge are fees collected from developers at the time a building permit is issued. The Toronto rate effected in 2016 is $16,746/unit for apartment one bedroom or bachelor, $24,072/unit for apartment two bedroom or larger. For non-residential use development, the charge was $203.07/sq. m. When determining the number of units for each type, we used the statistic from CMHC’s Number of Private Apartment Units by Zone report and calculated the proportion of each housing type in their neighbourhood. We estimated an average floor areas for each type of apartment units based on market average. Finally, we applied the percentage distribution of each type of housing units within the neighbourhood to our new building to project the unit type distribution for our proposed developments. Therefore we were able to determine the actual number of units in the proposed development, which allowed us to estimate the costs of development charges. By adding up the application fees, rental demolition fee and development charge, we calculated the total costs for application process for both proposed developments.

Appendix 5 Assumption of Construction Loan and Value of Rental & Commercial Components.

We assumed the construction phase will take two years. In the two-year period, the project was subject to a construction loan, which was 75 percent of the total construction cost (before financed). The amount of interest will be carried to the first operational year. The calculation of interest was broken down into two years. For simplicity’s sake, we assumed the sales in the first year will be able to pay off all the debt, and there is no permanent loan during the operational years.

Replaced rental units in new developments are not able to generate property sale revenues instantly. In order to estimate the value of rental component, we assumed that a third party rental management company would be willing to take over the rental units and operate in the long run. We used first operational year’s Net Operating Income (NOI) of the rental units divided by the Capitalization Rate of 6 percent to to project the value of the rental units. The value of the rental component was considered as part of revenues in pro forma.

Similarly, the value of commercial components on Danforth Avenue site can be derived based on its first year NOI and a Cap Rate of 3.75 percent. The value of the 11,130 sq. ft. commercial space was estimated to be around 2 million, shown in Appendix 1.3.

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Appendix 6 Terms of Reference

City of Toronto Residential Rental Property Demolition– a review of the City’s Official Plan and Municipal Code policy context in maintaining Toronto’s Rental Housing Stock

Client: Bousfields Inc and MenkesInstructor: Carlo Bonanni

Purpose of Study

The City of Toronto regulates the demolition or conversion of residential rental properties and prohibits such without its successful replacement. To research the existing policy and regulatory framework, apply this policy to case studies, and determine if the existing policy is prohibitive to redevelopment on sites that contain residential rental units. To determine if the policy is meeting the original intent of the rental replacement policies.

Key Themes

1. What is the goal of Toronto’s Rental Housing Replacement Policies– Review the intent of the policy and determine what Toronto defines as a healthy rental market. 2. Is it suitable to require rental replacement in all situations? – Do the policies prohibit redevelopment where existing rental units are required to be replaced? 3. Do the existing policies support the current intensification policies for properties located in the Downtown, on the City’s Avenues, and around major transit station areas, etc? 4. Are there legislative barriers to implement incentives to redevelop sites that contain a large number of rental units? 5. Comparison of Plans– Case studies – compare selected sites with different characteristics and redevelopment permissions. Is it economically viable once rental replacement is factored in? 6. Are the existing policies too general? Could they be refined to include additional criteria?

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Case Studies

Review case studies provided with different contexts and redevelopment potential. Determine if rental replacement is economically viable, achievable in the new design, and desirable from a planning perspective.

Context for Rental Housing Replacement policies:

1. PPS/Growth Plan housing objectives 2. City of Toronto Official Plan 3. Toronto Municipal Code/Chapter 667 4. Section 111 Permit 5. Tenant Relocation and Assistance Package 6. Financial cost of providing replacement units/tenant relocation 7. Opportunity for improvements to older rental buildings 8. Case Study prepared by City of Toronto by Barry Lyons and AssociatesDeliverables

Report that reviews the following: • The policy basis for Rental Replacement. What is the City trying to achieve? • What is the existing policy and regulatory framework applicable to lands that contain residential rental units. • Identify the positives of the policy framework as well as the potential barriers to redevelopment. • Apply this context to case studies to identify the varying effects of the policies on a successful redevelopment. • Indicate how other jurisdictions in Canada and the US deal with rental housing replacement • Illustrate the implications of rental replacement through study of a pro forma analysis and sketch up design. • Determine if the policy basis of rental replacement identified at the outset is successful and advise of any proposed revisions to the existing framework.